Nikkei 225 Rebounds Above 64,900 as Nvidia's Multibillion-Dollar AI Deals With Korea Lift Tech Stocks

Japan's benchmark stock index climbed Monday, extending a rebound from last week's sharp selloff as fresh multibillion-dollar AI infrastructure deals between Nvidia and South Korean technology giants reignited investor enthusiasm across Asian chip and technology stocks.

A modest but meaningful gain

The Nikkei 225 rose 0.50%, or 320.04 points, to trade at 64,931.19 as of Monday afternoon in Tokyo. The gain came as part of a broader recovery across Asian equity markets, with the index opening more than 0.8% higher earlier in the session before paring some gains as trading progressed through the afternoon.

Riding the coattails of Nvidia's Korea push

Monday's advance followed a series of major announcements unveiled over the weekend in San Francisco, where Nvidia agreed to invest $1 billion in South Korean internet giant Naver to expand an AI data center, while separately unveiling a broader partnership with SK Group valued at more than $500 billion in combined business over time. Those announcements sparked a sharp rally in South Korean chip stocks, with Samsung Electronics and SK Hynix both posting solid gains, and the momentum spilled over into Japanese markets, where technology and semiconductor-related shares moved higher in sympathy.

A volatile stretch heading into the new week

Monday's gains came on the heels of a turbulent week for Japanese equities. The Nikkei tumbled 2.77% on Friday to close at 64,584 points, reversing gains from earlier sessions as investors around the world grew increasingly cautious about whether massive artificial intelligence spending commitments from major technology companies would ultimately generate sufficient returns. Friday's decline hit AI-linked names particularly hard, with SoftBank Group falling 7.57%, chip-testing equipment maker Advantest dropping 6%, semiconductor manufacturing equipment maker Tokyo Electron losing 5%, and memory chipmaker Kioxia Holdings tumbling 9.5%.

That pullback was compounded by broader macroeconomic pressure. Fresh U.S. tariffs of 10% to 12.5% on imports from most major trading partners, replacing an expiring global import duty, added to investor unease last week, while escalating tensions in the Middle East pushed Brent crude above $100 a barrel, reinforcing inflation concerns. Domestically, Japan's headline inflation rose to 1.7% in June, its highest level in six months, reinforcing expectations that the Bank of Japan could pursue further interest rate increases in the months ahead.

Despite Friday's sharp drop, the Nikkei still finished the week 0.7% higher, while the broader Topix index gained more than 2%, marking the two indexes' first weekly advance in three weeks, a sign that the underlying rally, while volatile, had not yet fully reversed course heading into this week's trading.

Part of an extraordinary year for Japanese stocks

Monday's rebound adds to what has already been one of the most remarkable years in the Nikkei's history. The index has climbed roughly 33% year-to-date at various points in 2026, briefly topping 68,000 for the first time in early June, driven by what analysts have described as an AI-fueled buying frenzy sweeping across global technology markets. Khoon Goh, head of Asia research at ANZ, described the dynamic driving the region's markets higher earlier this year, telling Al Jazeera, "Investor enthusiasm over the AI boom is helping drive Asian equity markets higher." Goh noted that strong demand for high-end chips had fueled rallies in Taiwan and South Korea's top semiconductor companies, with those gains spilling over into Japanese markets, further supported by continued weakness in the Japanese yen.

Chip and AI-linked names remain the dominant story

As in South Korea, Japan's rally has been closely tied to the fortunes of a relatively small group of technology and semiconductor-linked companies. SoftBank Group, Tokyo Electron, Advantest and Kioxia Holdings have repeatedly served as bellwethers for the broader index's swings, rising sharply during periods of AI optimism and falling just as sharply when concerns about the sustainability of AI-related spending resurface. Kioxia shares, for instance, jumped 27% from their monthly low earlier this year before facing renewed pressure amid last week's broader tech selloff, illustrating just how quickly sentiment toward individual chip and memory names has shifted throughout 2026.

A record-setting global AI investment boom

The volatility in Japanese and South Korean markets reflects a broader global pattern this year, as demand for AI chips has driven record-breaking rallies across major indexes in the United States, Japan, South Korea and Taiwan. During the past several months, memory chip manufacturers SK Hynix, Samsung Electronics and U.S.-based Micron all joined the small club of companies with market capitalizations exceeding $1 trillion, bringing the total number of trillion-dollar companies worldwide to 17, the vast majority of them based in the United States. U.S. technology companies are expected to spend roughly $800 billion on AI-related capital investment in 2026 alone, according to estimates from Goldman Sachs, underscoring the scale of the spending driving markets higher, even as some investors have grown increasingly focused on whether that spending will ultimately translate into commensurate returns.

With Japan's earnings season now in full swing, investors are expected to closely watch upcoming results from major domestic companies, including Sumitomo Mitsui, Chugai Pharma and Shin-Etsu Chemical, for further signals on how the broader economy is weathering elevated inflation and a shifting global trade environment. At the same time, continued developments tied to Nvidia's expanding partnerships across South Korea and Japan are likely to remain a key driver of sentiment in the near term, as markets across the region continue to swing between optimism over the AI investment boom and periodic bouts of concern about how sustainable that spending ultimately proves to be.